OSCON 2004: The SCO Moot Court

Editor's note: This article came from detailed notes, though not a full
transcription of the event. As a result, some of the names and dates may be
incorrect. On 03 August 2004, Jonathan Zittrain clarified some of his comments
further, as you can read below.

On Monday night of OSCON, several open-source-friendly lawyers
held a mock court to debate SCO's recent Linux-related lawsuit with IBM. While
the lawyers and audience itself were definitely most sympathetic to
the opposite position, the idea that SCO has no copyright claims
over the Linux kernel, as host Pam Samuelson pointed out, is a position that any good lawyer can reasonably argue.

Jon Zittrain, from Harvard Law School, who worked on Eldred v.
Ashcroft, argued the pro-SCO side. Pam was careful to point out
that Jon much preferred the IBM position, but since neither IBM nor
SCO laywers could comment on the case without facing censure from
the presiding magistrate, and she could not find anyone else
willing to argue SCO's position, Jon took the job. Mark Radcliffe, an IP laywer from
Palo Alto, California, argued the pro-IBM position.

Jon started by explaining where SCO, at least the current
iteration, came from. He traced it to Caldera, mentioning that the
initial public offering in March 2000 produced a market value of
$1.1 billion dollars. Today it's worth $61 million, thanks to
the inappropriate, wrongful, and legally actionable IP theft from
many parties, including IBM.

Jon next explained a brief history of Unix, starting at
AT&T's Bell Labs in 1969. AT&T failed to make much of Unix
until 1984, when the court-ordered breakup allowed them to pursue
other markets it had left alone due to anti-trust concerns. Unix had
a very collaborative and loose development, especially with
universities. With the anti-trust concerns out of the way, AT&T
tried commercial development.

You might remember that Richard M. Stallman started the GNU
project also in 1984, intending to recreate a Unix-like system
without using any Unix code.

AT&T owned almost every aspect of Unix and
entered into some 80,000 licensing agreements with around 6,000
institutions. Jon claimed that, oddly, there were really no
licensing templates -- these were very unique licenses. Thus, any
licensing dispute with any group depends on the specific language
of the license. He gave the impression that this was a mess, since
decisions made on any one dispute would translate to other licenses
only with difficulty.

Most importantly, IBM and AT&T made a deal where IBM could
see and modify AT&T's SysV Unix code. IBM could redistribute
any derived software it made but not the source code itself. IBM
had to pay royalties and keep the source and aspects of operation
of Unix confidential.

SCO's chain of title to Unix (at least as the company claims) is
somewhat Byzantine, Jon said. In September 1995, Santa Cruz
Operation (SCO Zero, not the current SCO One), bought almost all of
AT&T's rights to Unix, apparently from Novell. Novell, retained 95 percent of the royalties from existing licences, but also
retained veto power over licensing.

SCO maintains that Novell's power applies only to
continuing licenses, not new ones. If this is true, Novell
has no power over new licenses that SCO negotiated after this
agreement.

Part of the confusion comes from the amendments that were eventually
attached to the SCO-Novell agreement. Things started to fail with
amendment one, which listed exceptions to the agreement.
Purportedly, it left out all of the copyrights. According to Jon,
SCO claims that this was a typographical error, corrected a year
later in another amendment, itself confusing and mostly
unreadable.

Interestingly, Darl McBride, now head of SCO, negotiated that
contract--for Novell. He's prepared to testify on behalf of SCO
now though.

SCO took no action until after the head of IBM software gave a
keynote at LinuxWorld in January 2003, committing IBM's Unix and
AIX expertise to improve Linux. This surprised SCO, who decided to
play David to IBM's Goliath. (With a valuation of $143 billion, IBM
is definitely larger than the $61 million SCO.) Jon explained that
SCO merely wants to protect its rights as negotiated in IBM's
agreement with AT&T.

SCO's ongoing discovery process is attempting to figure out
exactly which code is infringing. SCO's interpretation
of copyright law suggests that copyright protects not just literal
code, but the sequence, structure, and operation of a program.
So Linux doesn't have to copy Unix code line by line to infringe.

Even if they haven't shown specific code, Jon continued, SCO can
still claim that there is infringement of certain ideas, methods,
and concepts of SysV, with the reasoning that this is why IBM was
so certain it could help improve Linux.

Even if copyright law doesn't cover this, IBM's contract with
AT&T does. This contract prevents IBM from divulging this
code.

Jon then provided musical and publishing examples of copyright
precedents, citing the case where a jury decided that George
Harrison subconsciously infringed on the song "He's So Fine"
while writing "My Sweet Lord" and a case where a magazine
published only a few words from Gerald Ford's upcoming
autobiography but still infringed because it published the only
words anyone would want to read from an otherwise turgid
memoir.

SCO's argument, as Jon put it, is that "the infringing code is
the heart and soul of Linux and Unix."

For example, as proof that the case has merit, Jon suggested
that SCO's lawyers believe in the case. Of course, they charge an
hourly fee for the case much lower than the industry average--in
exchange for 20 percent of the judgments, acquisitions, and financing that
result from the case. In October 2003, when SCO raised $50 million,
the laywers netted around $8.9 million. Clearly, they're willing to
put their money where their mouths are.

As to the claim that Linux developers could rewrite the
infringing code, SCO claims that this does nothing to satisfy the
infringement. There are smaller penalties for unwitting
infringement, but there are still penalties. Even though SCO failed
to register its copyright (as the AT&T code came about before
the U. S. signed the Berne Convention, giving authors automatic
copyright protection without manually attaching a license to every
copyrighted item distributed) before filing the suit, it still
deserves statutory damages and can claim those in figure suits.

Jonathan Zittrain writes:

I think what I meant so say was: Thanks to the Berne Convention
(and the Copyright Act of 1976), one no longer needs to formally register a
copyright in order to enjoy protection. However, one must register before
suing in order to have access to "statutory damages" -- damages in the absence
of actual harm. SCO didn't register before suing IBM, so cannot claim
statutory damages for copyright in its case. Of course, now that it's
registered, any new cases could have such damages contemplated if all the other
elements of infringement were proved.

Jon also mentioned some of the justification for the other suits
and SCO's Linux licensing program. Most importantly, SCO believes
that the open process of development used for the Linux kernel does
not protect against improperly copied code. On the other hand,
its amnesty program shows that SCO has a sense of mercy and
compassion.

Of course, some commentators (as well as IBM) have pointed out
that SCO has actually distributed Linux and related software under
the GNU GPL. Jon explained that SCO's position that the GPL
violates the U. S. Constitution. By the way, they didn't know then
that they owned parts of the IP in Linux. They were angry to
discover that.

Jon finished by describing the open source crossroads. It's a
victim of its own success, with increasing mainstream acceptance by
large corporate behemoths. Lawsuits are a fact of life in a pond
this big. SCO's advice to developers is to get used to this.

There are many developers building groups, such as the Open
Source Risk Management group, to offer protection from and
education about copyright and ownership issues. Alternatively, users
have the option of paying the $700 license fee. Otherwise, you can
take your chances.

Jonathan Zittrain explains further:

The $700 license gets a promise from SCO not to sue for simply
running Linux, but it requires the licensee to agree not to make any changes to
the Linux source. So it's not much of an option for someone who actually wants
to code!

Jon stepped slightly out of character (or put his tongue more
firmly in his cheek) to explain that the nature of the failed
dot-com company is to sue. If you've contributed to code without
expecting remuneration, you'll have to wonder when they'll sue you
too.

Of course, SCO hasn't yet sued anyone without a larger market
capitalization than their own.